Higher beef prices bite fast-food chains

Burger King is known for its Whopper sandwich. Soaring beef prices have hurt fast-food restaurants that feature beef as the centerpieces of their menus.

Photo: Gene J. Puskar, STF

Rising beef prices might not mean the cost of a Whopper is going to skyrocket, but it could mean you'll be encouraged to order chicken instead.

Beef prices have climbed in part because of rising demand overseas and droughts in recent years that have caused livestock producers to shrink their cattle herds. The average, year-to-date price for 81 percent lean ground beef is $2.18 per pound, said Kevin Good, an analyst at CattleFax, a tracker of the beef industry. That's up 24 percent from a year ago.

The soaring prices have hurt fast-food restaurants that feature beef as the centerpiece of their menus: Burger King, Wendy's and McDonald's - the nation's three biggest burger chains - all say they're dealing with higher beef costs.

But fast-food chains, which sometimes pass along additional costs for ingredients to customers, realize there's only so much people are willing to pay for a burger. So, they're taking other measures to help ease the pressure, such as slashing expenses elsewhere or trying to get people to order other things on their menus.

Arby's, a chain best known for its roast beef sandwiches, next week is rolling out a new line of steak sandwiches. But without providing details, CEO Paul Brown said the company is also looking for "more opportunities" to promote chicken."

Alex Macedo, president of Burger King's North American region, also said earlier this year the company is pushing chicken more aggressively to offset rising beef costs. This summer, the chain said it brought back its Chicken Fries, which are deep-fried pieces of chicken.

Wendy's this week also announced a plan to cut costs by $30 million to offset challenges, which include rising beef costs. Spokesman Bob Bertini declined to specify how Wendy's is adjusting its marketing to deal with rising beef costs. But he said "our varied core menu with many chicken and salad options gives us options."

John Harrington, publisher of Feel of the Market, said livestock producers are just starting to replenish their herds after a drought in recent years. He doesn't expect prices to ease until 2017. "It just takes so long - two to three years to a breed a cow. You have to get the calf on the ground, grow the calf and then butcher the animal," he said.